Echeverria v. Tapestry, Inc. dba Coach

This is a putative class and representative action arising from alleged wage and hour violations. Plaintiff Jaime Echeverria alleges that defendant Tapestry, Inc. dba Coach (“Defendant”) required new employees to go through a lengthy onboarding process and that Defendant failed to fully pay employees for their onboarding activities. The parties have reached a settlement, and Plaintiff’s unopposed motion for preliminary approval of the settlement is before the Court. As discussed below, the Court GRANTS the motion for preliminary approval – subject to the conditions set forth herein – and sets a final approval hearing for January 6, 2026 at 1:30 p.m. in Department 11.

I. Legal Standard “In general, questions whether a settlement was fair and reasonable, whether notice to the class was adequate, whether certification of the class was proper, and whether the attorney fee award was proper are matters addressed to the trial court’s broad discretion.” (Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 234-235, disapproved of on other grounds by Hernandez v. Restoration Hardware, Inc. (2018) 4 Cal.5th 260.) The most important factor is the strength of the plaintiffs’ case on the merits, balanced against the amount offered in settlement. (See Kullar v.

Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 130.) Similar to its review of class action settlements, a trial court must “review and approve” any settlement of an action filed under the Private Attorneys General Act (“PAGA”). (Lab. Code, § 2699, subd. (s)(2).) Labor Code section 2699, subdivision (l)(2) provides that “[t]he superior court shall review and approve any settlement of any civil action filed pursuant to” PAGA. The trial court must “determine independently whether a PAGA settlement is fair and reasonable,” to protect “the interests of the public and the LWDA in the enforcement of state labor laws.” (Moniz v.

Adecco USA, Inc. (2021) 72 Cal.App.5th 56, 76-77.) A PAGA settlement may be substantially discounted, and courts often exercise their discretion to award PAGA

penalties below the statutory maximum. (Carrington v. Starbucks Corp. (2018) 30 Cal.App.5th 504, 529; Amaral v. Cintas Corp. No. 2 (2008) 163 Cal.App.4th 1157, 1213.)

II.

Discussion

A. Provisions of the Settlement This case, has been settled on behalf of “Class Members,” defined as “all individuals in the Onboard Class, Pay Card Class, and Wage Statement Class, as defined below”: “Onboarding Class” means all current and former non-exempt employees in California who, according to Tapestry’s records produced during the lawsuit and Bates numbered TAPESTRY_ECHEVERRIA_000611-007051 completed the online onboarding process between December 1, 2017 and February 10, 2023. “Pay Card Class” means all former employees in California whose employment terminated for any reason (voluntary or involuntary) at any time between January 23, 2017 and February 10, 2023, and upon their separation of employment, according to the pay card provider records produced during the lawsuit and Bates numbered NETSPEND-ECHEVERRIA_000001-000002, received their final wages in the form of a pay card. “Wage Statement Class” means all current and former employees in California who, according to Tapestry’s records produced during the lawsuit and Bates numbered TAPESTRY_ECHEVERRIA_007325, received a paper wage statement between January 23, 2019 and November 20, 2020.

(Joint Stipulation of Class Action and PAGA Settlement Release (“Agreement”), ¶¶ 2, 11, 13, 20.) Defendant will pay a gross settlement amount of $1,250,000. (See Memorandum, pp. 1:21–2:14.) The gross settlement amount includes attorney fees of up to one-third of the gross settlement amount ($416,666.67); litigation costs up to $150,000; a PAGA allocation of $100,000 (75 percent of which will be paid to the LWDA and 25 percent of which will be paid to Class Members on pro rata basis); a service payment of up to $15,000; and settlement administration costs up to $38,250.

The Agreement provides that Phoenix Settlement Administrators (Phoenix”) will serve as the neutral entity that will administer the settlement. The Court appoints Phoenix as the settlement administrator. The Agreement further provides that funds from uncashed settlement checks will be tendered to the California State Controller’s office as unclaimed property, in the name of the

Participating Class Member. (Agreement, ¶ 53.) Code of Civil Procedure section 384 mandates that unclaimed or abandoned class members’ funds be given to “nonprofit organizations or foundations to support projects that will benefit the class or similarly situated persons, or that promote the law consistent with the objectives and purposes of the underlying cause of action, to child advocacy programs, or to nonprofit organizations providing civil legal services to the indigent.” In the Court’s view, the Agreement’s Unclaimed Funds provision at paragraph 53 does not comply with Code of Civil Procedure section 384.

Therefore, prior to mailing of the Class Notice, the parties shall meet and confer to designate a cy pres beneficiary and amend the Class Notice accordingly. In exchange for the settlement, the Class Members agree to and are deemed to release Defendant and related entities and persons from “any and all claims asserted in the Action or arising from, or derivative of, the claims or factual allegations asserted in this Action,” including the defined Onboarding Claims, Pay Card Claims, and Wage Statement Claims. (Agreement, ¶¶ 16, 23–25.)

The release provisions are appropriately tailored to the factual allegations of the operative pleading. (See Amaro v. Anaheim Arena Management, LLC (2021) 69 Cal.App.5th 521, 538.)

B. Fairness of the Settlement Plaintiff explains that the parties engaged in extensive motion practice and in two separate full-day mediation session (with Michael Loeb, Esq. and Hon. Peter H. Kirwan (Ret.)) prior to arriving at the terms of the Agreement. (Motion, pp. 2:23–3:25) The parties engaged in extensive discovery, with Plaintiff taking the depositions of Defendant’s PMKs, third party vendor, and Defendant’s expert witnesses. (Id. at p. 7:6 –10.) Defendant took the depositions of Plaintiff, nine class members, and Plaintiff’s expert witness. (Ibid.)

Plaintiff retained the services of an expert to evaluate the discovery performed and estimate the Class and PAGA penalties. (Id. at p. 7:11–24.) The expert estimated the total amount of potential class damages to be $8,337,282.24 and the total amount of PAGA penalties to be $567,750.00. (Ibid.) After the Court issued its Order granting Defendant’s Motion to Decertify, Plaintiff deemed the value of the class and PAGA claims to be reasonably reduced by 90 percent to $833,728.22 and

$56,975. (Ibid., Declaration of Larry W. Lee in Support of Preliminary Approval (“Lee Decl.”), ¶¶ 15–19.) Thus, Plaintiff estimates the total maximum value of the claims to be $8,907,032.24 and the realistic value of the claims to be $890,703.22. The gross settlement amount of $1,250,000 represents approximately 14 percent of Defendant’s estimated total maximum exposure, which is within the general range of percentage recoveries that California courts have found to be reasonable. Plaintiff’s counsel has explained the rationale supporting the settlement amount. The Court has reviewed Plaintiff’s written submissions and is satisfied that the settlement is fair and may be approved.

C. Service Award, Fees and Costs Plaintiff will seek a service award of $15,000. Plaintiff has submitted a declaration describing his participation in this litigation. He estimates he has spent approximately 80 hours working on this case, including preparing for and sitting for a deposition. The Court will issue its determination regarding the approved amount of the service award in connection with final approval of the settlement. Class counsel will seek attorney fees of up to one-third of the gross settlement amount ($416,666.67). Prior to the final approval hearing, class counsel shall submit lodestar information (including hourly rates and hours worked) as well as evidence of actual litigation costs incurred and settlement administration costs.

D. Conditional Certification of Class Plaintiff requests the class be conditionally certified for purposes of the settlement. California Code of Civil Procedure section 382 authorizes certification of a class “when the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court ...” Plaintiff states there are approximately 7,750 class members who can be identified from a review of Defendant’s records. The Court finds that there are common questions regarding

whether class members were subjected to unlawful conduct and that proposed class may be conditionally certified for settlement purposes.

E. Class Notice California Rules of Court, rule 3.769, subdivision (f), provides, “If the court has certified the action as a class action, notice of the final approval hearing must be given to the class members in the manner specified by the court. The notice must contain an explanation of the proposed settlement and procedures for class members to follow in filing written objections to it and in arranging to appear at the settlement hearing and state any objections to the proposed settlement.”

Here, the form of the notice is generally adequate subject to the modifications set forth below. It describes the lawsuit, explains the settlement, and states the settlement amounts, including attorney fees and payment to the named plaintiff. The notice informs class members that they may appear at the final fairness hearing to make an oral objection without filing a written objection. As discussed above, the Court instructs the parties to meet and confer to designate a cy pres beneficiary in accordance with Code of Civil Procedure section 384 and to amend the Class Notice accordingly – prior to its mailing.

In addition, the following language regarding the final approval hearing shall be added to the notice: Class members may appear at the final approval hearing in person or remotely using the link for Department 11 (Afternoon Session), and should review the remote appearance instructions beforehand: https://santaclara.courts.ca.gov/online-services/remote-hearings Class members who wish to appear remotely are encouraged to contact class counsel at least three days before the hearing, if possible, so that potential technology or audibility issues can be avoided or minimized.

On the condition that the parties make the above modifications to the notice prior to its mailing, the notice is approved.

III.

Conclusion

The Court GRANTS the motion for preliminary approval – subject to the conditions set forth above – and sets a final approval hearing for January 6, 2026 at 1:30 p.m. in Department 11. Plaintiff shall prepare the order in accordance with California Rules of Court, rule 3.1312.

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